Bond+Discount+Amortization - Therefore, the difference of...

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Bond Discount Amortization Why does bond discount amortization increase interest expense? On Slide 8, bonds with a par value of $700,000 are issued for $666,633. Although the company only received $666,633, the company must repay the bond investors $700,000 at maturity.
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Unformatted text preview: Therefore, the difference of $33,367 (the amount of the discount) is in effect additional interest expense of the company. (See Slide 11) For the bond investor, the same reasoning results in interest revenue greater than the cash received for interest....
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This note was uploaded on 07/08/2011 for the course ACG 4133c taught by Professor Ajinka during the Summer '08 term at University of Florida.

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